Australia accelerated towards a victory in Michael Hussey's final Test as six evening-session wickets on day three undermined a Sri Lanka fightback.The tourists had threatened to steal the initiative in Sydney, as they attempt to avoid a 3-0 series whitewash, after they reached tea eight runs adrift with one wicket down.

But Australia roared back in a potentially match-defining session to leave Sri Lanka 225 for seven – and with a lead of 87 – at the close.

Australia had looked as though they would face a far tougher chase, on a wicket starting to show signs of wear, after Dimuth Karunaratne and Mahela Jayawardene – in his final Test as captain – erased a 138-run first-innings deficit.

Matthew Wade's first Test century on home soil had allowed the hosts to build that lead in the morning before the Australia captain, Michael Clarke, surprisingly declared on 432 for nine, 30 minutes before lunch.

Clarke's call was rewarded with the early wicket of Tillakaratne Dilshan, who edged Mitchell Johnson to third slip, but Karunaratne and Jayawardene then took charge.

Karunaratne has endured a difficult first tour in Australia but looked on course for his maiden Test century as he took the attack to the hosts. The 24-year-old brought up his 50 by driving Nathan Lyon over long-on for six, although he survived a dropped catch by Wade off the spinner when on 54.

He reached tea on 83, and within sight of three figures, with Jayawardene providing able assistance in an unbroken 106-run stand. But Karunaratne added two more runs after the resumption as Sri Lanka's hopes tumbled with a flurry of wickets that, at one stage, saw them lose four for 23.

Karunaratne fell to a good ball from Jackson Bird that found the edge through to Wade but his team-mates offered their wickets more meekly than the situation demanded.

Lahiru Thirimanne, who made 91 in the first innings, managed seven before he hooked Johnson to fine leg and in the next over Thilan Samaraweera recklessly bounded down the wicket at Lyon only to sky a chance before he had scored.

That sparked the mini collapse of four wickets as Angelo Mathews was run out following confusion with Jayawardene, and some excellent fielding by David Warner at midwicket, before the captain offered an edge behind soon after off the tireless Peter Siddle. Clarke had to react well low to his left at first slip to take the chance but Jayawardene's departure, after he had reached 60, ensured Australia had all but snuffed out Sri Lanka's resurgence.

It was left to the tail to build the small lead, but Dhammika Prasad nicked to Wade off Mitchell Starc. Dinesh Chandimal (22 not out) and Rangana Herath (7no) remained at the close, although they have plenty more work to do if Sri Lanka are to set a testing fourth-day chase.